ALBAWABA – Oil prices rose Monday on new China stimulus and a near-global rally in stocks in the United States (US), European Union (EU) and Asia markets, as well as remarks by the US Federal Reserve (Fed) on potentially pinning interest rates in September.
Brent crude rose $0.19, to $84.67 a barrel by 0627 GMT, according to Reuters, and West Texas Intermediate crude traded at $80.09 a barrel, up $0.26.
Fed Chair Jerome Powell’s speech at Jackson Hole on Friday hinted that the central bank would take no action at its September meeting.
His remarks helped lift oil prices, Warren Patterson, head of commodities strategy for ING Groep NV in Singapore, told Bloomberg.
Raising interest rates increases the value of the currency.
Naturally, a weaker, or in this case stable; US dollar bolsters demand prospects in the oil markets, as it helps stabilize a crucial market component.
A stronger dollar affects demand and lowers oil prices - Shutterstock
More so, “news of Chinese stimulus has provided further support,” Patterson added. Still, “prices are likely to remain range-bound in the short term, with lingering demand concerns and stronger supply.”
Brent and WTI posted a second week of losses on Friday, before picking up Monday.
In the US, energy firms cut the number of active oil rigs for a ninth month in August, Baker Hughes said in a report, carried by Reuters.
Oil prices have remained above $80 a barrel on support from falling oil inventories and supply cuts from the Organization of Oil Exporting Countries and its allies, Reuters underlined.
However, "the narrative of tightening supply," has been eroded by prospects of easing sanctions on Iran and Venezuela, ANZ Research said in a client note on Monday.
